McKinsey & Co CEO Bob Sternfels has remarked that “many people have said that it’s India’s decade. I actually think it’s India’s century when we look at some of the raw ingredients here. India is the future talent factory for the world. By 2047, India would have 20% of the world’s working population. And with supply chains being reimagined, it has massive potential for India across all aspects of manufacturing.”
He also hailed India’s digitalisation growth and said India has leapfrogged on the digital scale. All those are the raw materials to do something special for not only the Indian economy but potentially for the world. He went further and said that he is bringing his global board here in December because “we are going to make a disproportionate commitment to India. We are about 5,000 people in India now—both in India practice and global centres—and it’s my aspiration to get to 10,000.”
On the other side Moody’s Investors Service slashed India’s economic growth projection for 2022 to 7.7 per cent, saying that rising interest rates, uneven monsoon and slowing global growth will dampen economic momentum on a sequential basis. Moody’s had in May projected India’s GDP to expand by 8.8 per cent this year. The economy grew by 8.3 per cent in 2021 and contracted by 6.7 per cent in 2020, the year when the pandemic struck the country. “Our expectation that India’s real GDP growth will slow from 8.3 per cent in 2021 to 7.7 per cent in 2022 and to decelerate further to 5.2 per cent in 2023 assumes that rising interest rates, uneven distribution of monsoons, and slowing global growth will dampen economic momentum on a sequential basis,” Moody’s said.
Moody’s expects inflationary pressures to weaken in the second half (July-December) of the year and further in 2023. A quicker let-up in global commodity prices would provide significant upside to growth.
With regard to inflation, Moody’s said although inflation eased slightly to 6.7 per cent in July, it remains above the central bank’s target range of 2-6 per cent for the seventh straight month. The RBI forecasts that the inflation will remain high into 2023 and has hiked rates three times this year to 5.4 per cent to tame inflation.
No doubt, economic growth forecasts are real.